We have a qualified profit sharing plan which is solely company funded. Contributions are discretionary. Two companies have adopted the plan agreement. When the plan was initially adopted the companies were a controlled group but are currently NOT a controlled group. If necessary we can make the companies a controlled group.

Can one company still contribute to the plan that benefits ALL participating employees in the plan (who are from both companies) and the company who makes the contribution take a tax deduction for the COMPLETE contribution? i.e. we have basically been picking and choosing which company needs the tax deduction and making the contribution from that company. Can we keep doing this? Our TPA says no.

I am trying to figure out the limig of Employer Securities is a 401(k) Plan.

Participant Directed Accounts

Participant may elect Employer Stock in Self Directed Account

Can transfer anytime.

Many other investment options are available.

non-public company

I see that the 10% limit of plan assets does apply

But I see something that limits the amount of stock held by the plan to 25% of the stock issued.

ER wants to add, I want to make sure we cover all the potential problems.

Employees are well educated, so ER does not worry about communicating to the employees the risk of putting retirement money and their job all in one.

Ideas?

Thanks

P

I just had a client email me with this question:

"I am trying to find out if Catch-Up contributions can be changed anytime during a plan year. I found where we elected to have Catch-Up contributions, but find nowhere that states a specific date if someone should want to increase or decrease their Catch-Up contribution. Is it correct to say that a Catch-Up contribution amount can be changed at anytime through a plan year?"

The plan document says " Participants may modify deferral elections on 1st day of PY and 1st day of 7th month of PY" -

What I am not sure of is how they would specifically modify the catch up amount - just reduce their percentage or dollar amount for all deferrals? What am I missing here?

A 401k Safe Harbor Plan has the following provisions:

- 6 mos elig for 401k deferral contributions (no min age)

- 12 mos/1000 hrs (no min age) for employer SH (3%), discretionary PS (cross tested)

- dual entry dates, 1/1 and 7/1

2015 Plan Year, there are 2 employees newly eligible as of 7/1:

- 1 HCE (spouse of owner)

- 1 NHCE

Question 1

Assuming the Plan is NOT TH for the 2015 plan year, the 2 newly eligible participants will not receive SHNEC or PS but if their deferral %s pass the ADP test (testing only them), is it correct that the Plan will not fail any other testing (e.g. Gateway mins)?

If this is incorrect, can the Plan be amended to correct via accelerating eligibility for SH and PS to same 6 mos requirement and not lose its Safe Harbor status for the year?

Question 2

Assuming the Plan IS TH for the 2015 plan year and all other statements above apply... Assuming ADP test for 2 newly eligible passes, can the employer contribute 3% TH for these 2 newly eligible (assuming they are still employed on the last day of PY) without tripping the Gateway testing (assuming the GW minimum is at least 5%)?

If this is incorrect, can the Plan be amended to correct via accelerating eligibility for SH and PS to same 6 mos requirement and not lose its Safe Harbor status for the year?

Thank you for your assistance.

How do I complete 8951 to pay the reduced loan fee that came out in 2015-27?

Do the family attribution rules (for controlled group purposes) apply between a family member residing outisde the United States who is not an American citizen and a family member residing in the United States?

An owner exceeded the 402(g) limits in 2014 by 496....he also had to take an RMD of over $4000 - which he did in December 2014. I want to make sure that since you can't use a corrective distribution to satisfy a RMD - that he can't use part of the $4000 to say that the excess was distributed. I can't find exact back-up, so would like to be sure before I advise them to distribute the excess of 496 plus earnings (I know he missed the April 15 deadline)....thanks.

Independent Contractors can participate in a 457b. I thought I would find 100 articles about why it is great to have a 457b for Board Members paid as independent contractors but I found none. Am I missing something? It seems like an obvious use of this feature.

Are people doing this?

A plan outsources hardship withdrawal administration to their recordkeeper. The recordkeeper requests and reviews participant documentation and provides approvals. Can this be considered sufficient for the plan sponsor retaining the necessary records? The records are available for them, they are just retained with their recordkeeper.

A DB plan is terminating and there will be between 7-12 participants who purchase annuities. The broker assisting with the annuity solicitation commented:

As we got further into our discussions with each carrier and realized that we did not have many participants that were interested in the annuity option, our choices narrowed further as group policy providers became disinterested. Lincoln National would not allow their products to be used with a terminating pension plan. Principal Financial could only work with us on a group platform, which would require more participants to choice the annuity option. MetLife and Prudential also declined to open their annuity products in this instance due to the size of the quote. Since American General is willing to offer individual annuities, they became the leading option.

Are these comments consistent with what others are finding?

Plan year end is 9-30-14. With the audit just about done, it's a good time to do the 401(k) test, right? (Shh!)

Plan fails. Three HCEs, all over 59½, would be in line to get refunds of about $1,000 each. But, they hadn't used any of their 2014 catchup amounts yet, and so those amounts are supposed to be recharacterized as 2014 catchups. (Calendar year in which the plan year ends.) None of them actually got to 17,500 by Sept. 30, though.

The problem is, at least one, if not all of them, probably got to 23,000 total when you throw on their 4th Q 2014 amounts. That's clearly a problem - they will have done too much in catchups, since their catchup limit for 2014 should then have been 5,500 MINUS that thousand dollars to be recharacterized.

And so amounts over the catchup limit are deemed to be excess deferrals. So that's why I'm glad they're over 59½ - I can't refund the amounts as excess contributions from the test.

It's after April 15, so at least their age provides a distributable event to get the money out. So typically you'd say the amounts are subject to double taxation. But their W-2s will not have shown an excess deferral, as back in January before the tests were run it certainly didn't SEEM like a problem to have $23,000 on the W-2.

Are they going to beat the double taxation, or should tax forms and returns be amended?

Thanks...

--bri

Participant was out on disability and hi loan payments were suspended for a year. The year was up 3/15/2015. Does the loan become incurable on 3/15/2015, or 6/30/2015 (i.e., the last day of the quarter following the quarter)?

We have one client who is an owner of a small company. He wants to take all of his money out. He cannot take his money out as an in-service (he's under 59 1/2 and his account consists mostly of Deferrals and Safe Match contributions). What he wants to do is "terminate" himself for one day, take a distribution out for all his funds (approve the distribution as the trustee), and then become "re-hired" the next day. This seems pretty sketchy to me personally. Is this allowed?

Just have a quick question... Can a plan that doesn't allow for an in-service distribution be amended to allow for in-service distributions at any time?

A DC plan terminates and pays out all benefits. AFTER all benefits have been paid out, the custodian (thank you very much) credits revenue sharing to us (we are both fiduciary advisor and recordkeeper).

The amount of the revenue sharing received does not cover the cost to distribute it - not that this matters philosophiclaly, but practically, it carries weight.

Of course, nobody wants to deal with this, not us, not the plan sponsor - we, however have to.

Eagerly await your enlightened comments and opinions.

401k rollovers and 401k transfers share some similarities, but the differences between a 401k rollover and a 401k transfer are what savvy investors hone in on to maximize their chances of retirement account success.

In mid June 2015, the DOL has been emailing certain plan sponsors with regard to their 2013 Form 5500 series, where Schedule I, Part II, line 4(e) shows no fidelity bond coverage for the 2013 PYE. Please see ERISA Section 412.

The instructions to the letter state the plan sponsor should:

a). Submit the fidelity bond coverage documentation via fax or email, within 15 days of the date of the specific letter, or

b). If the fidelity bond answer was incorrect, and there was a fidelity bond, the plan sponsor should amend their Form 5500 Series via EFAST2. A copy of the ERISA rider should be forwarded to the DOL, as well.

While not a sales person for insurance companies, there is at least one entity that may provide for special situation coverage.

I have a client who needs to correct some plan errors pursuant to VCP. One of the errors may require the employer to make an additional contribution to the plan.

An employee has just terminated employment and is entitled to a distribution.

Can (or should) the employer pay the employee out or retain the employee's account balance pending resolution of the VCP matter (bear in mind the application has not yet been submitted).

Any thoughts are welcome.

Would student loans count under the safe harbor harship rules as tuition expenses? Even though they are not exactly tuition expenses, the hardhsip was caused by the tuition expenses.

Thanks

If a client let an ineligible employee Defer- is the accepted correction to return the deferral plus earnings or do they forfeit the def and match-and make them whole outside the plan?